ELYRIA -- The City of Elyria will get an unexpected windfall of nearly $3.5 million in unclaimed funds, but Mayor Holly Brinda said it is not a financial cure-all.

"It is very much needed, but it doesn't solve the long-term financial challenges of the city, and we need to be very careful about how we use it," Brinda said. "While $3.5 million sounds like a lot of money, it is a small percentage of our actual general fund."

The city will still make $1.7 million in budget cuts and push for the renewal of a half-percent temporary income tax levy in November, Brinda said. The city's general fund is about $30 million, she said.

The $3,479,527.80 windfall will be forwarded to the city on Monday. It comes from full-time employee life insurance purchased in the 1990s from Anthem that later turned into stock shares when Anthem went from a mutual insurance company to a stock insurance company in 2001, Brinda said.

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Anthem then merged with Wellpoint in 2004, and the funds from the city's shares stayed with Wellpoint Inc. for 10 years before being transferred to the State of Ohio Commerce Department Unclaimed Funds account in 2012.

Brinda learned about the money a few weeks ago, but did not know the amount until Jan. 7 after the city completed its application.

"I think the important thing to remember is that the funds are one-time," Brinda said. "Some wise types of investments may be to pay down debt or to invest in one-time capital costs or emergency repairs.

"That is something the administration and city council will have to talk about over the next few weeks," she said.

She said city council will look at adopting a policy on the use of one-time revenue to determine how best to use the money.

Brinda hopes residents will not see the money from the unclaimed funds account as a reason to vote down the city's half-percent income tax levy in November. The renewal will not cost taxpayers anything additional and will generate $6 million a year for five years. The tax money is crucial to the basic operations of the city, she said.

A plan to reduce spending in the city will still move forward.

The city's expected $1.7 million in cuts are needed because of anticipated losses in revenue in the next two years, Brinda said. Elyria will lose roughly $11 million in that time from the repeal of the estate tax, a decline in local government funds from the state and the expiration of stimulus money, she said.

"As we forecast ahead, we need to think about creating the most efficient business model possible to run the city," she said. "The adjustments we make today will impact the budget next year and the following year. If we wait too long to reduce the budget, the problem gets exponentially larger."

A letter from Brinda regarding the unclaimed funds can be viewed on the city of Elyria's website, www.cityofelyria.org.